Farm Bill? Later.

Political gridlock may save U.S. from bad farm legislation

September 17, 2012

Farm bill supporters held a rally last week in Washington, D.C.The Senate and House agriculture committee passed versions of the farm bill over the summer, both full of handouts to the farm sector. (Rich Clement, Bloomberg)

They didn't dump grain on the steps of the Capitol building or steer a tractor convoy down Pennsylvania Avenue, but farmers rallying last week in Washington, D.C., still left no doubt about what they want from their elected representatives:

A farm bill. Now.

America's agricultural producers and their powerful lobbyists have a shot at committing the federal government to five years of lavish subsidy spending. The Senate and House agriculture committee passed versions of the farm bill over the summer, both full of indefensible handouts to the farm sector. With Congress scheduled to return this week for just a few days in what's expected to be a brief fall session, the finish line is oh-so-close.

Every taxpayer should hope the "Farm Bill Now" movement falls short.

Better a temporary extension that takes farm programs through the Nov. 6 election than a millstone that for the five-year duration of the bill would line the pockets of farm-insurance purveyors, distort the marketplace for vital commodities and drain the federal budget.

Neither the Senate nor the House measures come close to adequately reforming America's system of down-home country giveaways. Both versions of the bill should be scrapped — and we suspect they will be, if the debate over farm policy is postponed. This could be a rare instance where Washington gridlock, which otherwise has created damaging uncertainty and poisoned America's business climate, could work to the nation's advantage.

The hope is that a post-election Congress will act responsibly in a way the pre-election Congress has not. It will be compelled to deal with the broader issue of national debt as a result of the looming "fiscal cliff" — the automatic spending cuts and tax increases that will kick in at year-end without action to forestall it. Viewed in the broader context of what America can afford once its leaders finally come under deadline pressure to make difficult fiscal choices, the Farm Bill's poorly conceived subsidy regime should fail on its merits.

The farm bill usually makes it through Congress with broad bipartisan support. Despite its name, most of its spending goes for government food and nutrition programs that help the needy. Food stamps make up the biggest single component, and left-leaning Democrats strongly support them. Farm-state legislators, including many Republicans, generally support farm subsidies.

This year, however, the bill's political calculus has changed. Republicans have pushed hard to cut back food stamps. The Senate bill proposes $450 million a year in cuts, and the House bill $1.6 billion. In the scheme of a fast-growing, almost $80 billion program, those cuts are tiny. Still, the effort to cut benefits for the poorest Americans while piling on farm subsidies that go to some of the wealthiest has cost the farm bill some of its usual backing.

Most refreshing, both conservatives and liberals on Capitol Hill have voiced doubts about two proposed farm subsidy programs that are straight out of the Soviet central-planning tradition.

Price Loss Coverage revenue support and Supplementary Coverage Option insurance would amount to a vast expansion of the once-reasonable federal crop insurance program.

A decade ago, crop insurance protected farmers from losses they suffered during natural disasters such as the summer drought.

Under its latest bloated guise, crop insurance would in effect guarantee farmers a certain level of revenue and income from their businesses. The government would spend billions more in crop-insurance subsidies, much of it going to large foreign financial companies and their local insurance agents. Besides that wasteful spending, the proposed bill would threaten long-standing practices of sustainability and land stewardship. Insurance paid for by Uncle Sam creates an incentive for farmers to plant on environmentally sensitive land and to otherwise run risks that would make no business sense if the government weren't providing coverage.

Unfortunately, there's more to dislike: The delay in passing the farm bill this summer has afforded agricultural economists a chance to scrutinize the costs under certain crop conditions, and the results are alarming. Because of the summer drought, crop prices stand at some of their highest levels ever. Yet the bill uses those highly unusual prices as benchmarks for insurance payouts.

If prices returned to more typical levels, according to a recent analysis by the American Enterprise Institute, Uncle Sam's cost for Price Loss Coverage under the House plan would soar to $18 billion annually. That would be more than four times the amount Congress would save under a farm-payment program the current proposed bills would discontinue to — get this — save money.